The Villars’ P7.63-B paper gain

Emeterio Sd. Perez

Emeterio Sd. Perez

Additional listings. Three public companies are increasing the number of shares available for public trading by listing on Wednesday additional shares. These are Manila Electric Co. (Meralco), SM Investments Corp. (SMIC), and Starmalls Inc.

Meralco listed 15 million common shares, which it issued under the company’s stock option plan, and 691,091 common shares representing the 10-percent stock dividend due to the option shares. It closed on Tuesday at P308.80 on value turnover of P257.56 million.

Meralco climbed to 30-day high of P317 on October 16 and fell to month’s low of P269.20 on September 25.

SMIC listed 123,080 common shares, which it issued on October 25 to Deutsche Bank AG London in exchange for convertible bonds. At a conversion price of P624.625 a share, SMIC, in effect, paid P76.879 million of the debt it owes Deutsche Bank.

On October 25, SMIC opened at P854, peaked at P858, fell to a low of P935 and closed at P838. At closing price, Deutsche is ahead by P213.37, or 34.16 percent.

SMIC has allocated 13.66 million common shares to cover the conversion of bonds it issued in 2012, should the holders choose to be paid in common shares. At P624.62 conversion price each share, the bonds would be worth P8.53 billion.

Starmalls Inc. listed 3.53 billion common shares, which it swapped in 2012 with shares owned by various stockholders in Manuela Corp. The company’s shares and those of Manuela were then valued at P1.28 each and P5,945.45, respectively.

After the share swap, Manuela became a subsidiary of Starmalls, in which it owns 1.23 billion shares, or 14.52 percent while Manuela’s corporate stockholders that were also controlled by the Villar group ended up tightening their control of Starmalls.

Of 3.534 billion Starmalls shares swapped with Manuela shares, 1.402 billion went to Althorp Holdings Inc., 808.431 million to Land and Houses Public Co. Ltd., 728.90 million to Manuel Villar Jr., 361.944 million shares to Manuel Paolo Villar, and 232.016 million to Mark Villar.

Insiders’ billions. The Villars have been successful in charting the growth of the conglomerate they control. Their worth goes up with the increasing market value of the stocks they own. In the case of their holdings in Starmalls, as a result of the share swap transactions, these even nearly tripled the family’s wealth even if only in paper because the family is not about to liquidate anything.

As disclosed in regulatory filings, an independent valuation placed the value of Starmalls at the time of the swap deals at P1.28 each. At this price, the Villar group’s 3.534 billion Starmalls shares were then worth P4.523 billion, a huge amount that makes the family already very, very rich—and are getting richer.

In the share-for-share trade, the Villars lost only their direct holdings in Manuela. As the majority owners of Starmalls, they are indirect stockholders of Manuela, which, in turn, is now a subsidiary of Starmalls. They did not lose anything. Sorry to disappoint the public because based on filings, the Villars got more in the deal but in a legitimate way.

Consider this: At Starmalls close of P3.44 on Tuesday, the 3.53 billion shares the Villars got from the share swap had a market value of P12.16 billion, a paper value that put them ahead by P7.634 billion.

Meanwhile, Villar the father, a former Senate president, and his two sons received a total of 1.32 billion Starmalls shares for their Manuela holdings. At the swap valuation price of P1.28 each, their combined holdings were worth P1.693 billion that went up to P4.451 billion at Tuesday’s close of P3.44. The numbers show the three Villars alone recorded a paper gain of P2.76 billion.


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